Real v. Driscoll Strawberry Associates, Inc.

Decision Date08 August 1979
Docket NumberNo. 77-1935,77-1935
Citation603 F.2d 748
Parties24 Wage & Hour Cas. (BN 279, 51 A.L.R.Fed. 689, 86 Lab.Cas. P 33,821 CA 79-3000 Alonzo REAL, Jesus Real, Porfirio Flores, Ruben Mancillas, Andres Madrigal, Eliseo Ramirez, Jr., Genaro Castillo, Filomeno Leal, Jesus Guzman, Eudocio Salinas, Ramon R. Cavazos, Rosalio Vela, Jesus Cornejo, Matias Martinez, Eugenio Rodriguez, Individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. DRISCOLL STRAWBERRY ASSOCIATES, INC., D. J. Driscoll, Individually and doing business as Driscoll Berry Farms; Doe One through Doe Fifty, Black Corporation, White Corporation, Defendants- Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

Melvyn D. Silver, Morgan, Beauzay & Hammer, San Jose, Cal., for plaintiffs-appellants.

Eugene Garfinkle, Richard J. Archer, San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before CARTER, CHOY and BRIGHT, * Circuit Judges.

BRIGHT, Circuit Judge.

Fifteen individual plaintiffs (appellants), representing themselves and a class of similarly situated persons, appeal from a summary judgment dismissing their action brought under the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 Et seq. (1976), against the appellees, Driscoll Strawberry Associates, Inc. (DSA) and Donald J. Driscoll (Driscoll). The district court concluded that the record establishes as a matter of law that the appellants do not qualify as "employees" subject to protection under the FLSA. On appeal, appellants contend that issues of material fact exist concerning whether they operate as "employees" of Driscoll and/or DSA under the FLSA. We reverse the grant of summary judgment and remand for trial.

I. Factual Background.

Donald J. Driscoll, doing business as Driscoll Berry Farms, is one of several individuals and corporations that contracts with DSA to grow varieties of strawberries on which DSA owns patents.

Appellants represent a class of Mexican-American persons who work or have worked as strawberry growers under identical agreements, entitled "Patent Sublicense and Subcontract for Growing Strawberry Crop with Sublicensee" (the Agreement), with Driscoll. Each such Agreement is signed by an individual plaintiff-class member, as "Sub-Licensee," by Driscoll as "Contractor," and by DSA, declared to be a "third party beneficiary" of the Agreement. 1

The original complaint in this lawsuit referred to appellants as "independent contractors" and contained six counts charging antitrust and contract violations by DSA and Driscoll. 2 However, after counsel deposed the individual appellants with the assistance of Spanish-speaking interpreters, appellants changed their theory of the case. They added a seventh count to the complaint, alleging that the Agreements with the appellees are a "sham," that they are in reality employees of DSA and Driscoll jointly, and that the appellees have failed to compensate the appellants in accordance with the minimum wage standards of the FLSA.

The district court granted the appellees' motion for summary judgment and dismissed all seven counts of the complaint. On appeal, appellants challenge only the summary judgment on the FLSA claim.

We outline the evidence relating to the appellants' work status in some detail.

A. The Agreement.

DSA prepared the Agreement form, which has remained essentially unchanged during the period relevant here, and furnishes it to Driscoll. Apart from a few blanks in the form filled in by Driscoll, DSA established the terms of the Agreement without negotiation with Driscoll or any of the appellants.

The Agreement relates that DSA has granted Driscoll a license to grow a crop of DSA's patented strawberry varieties and the right to sublicense the growing of such crop to others, "subject to approval by (DSA) in each instance (.)" The Agreement stipulates that DSA shall at all times exclusively own both the strawberry plants it supplies to Driscoll and the crop derived from the plants.

Under the Agreement, Driscoll grants a "Sub-Licensee" (an appellant in this case) the right to grow a strawberry crop "for the account of (DSA)" on a described parcel of land (usually about three acres) owned or leased by Driscoll. Driscoll undertakes to plant the strawberries and to deliver the already planted land to the sublicensee. In return, the sublicensee agrees in essence to furnish the labor necessary to care for the land and plants during the growing season, 3 to harvest the strawberry crop, and to sort, grade and pack the strawberries for marketing by DSA. A sublicensee is empowered to hire and supervise all employees necessary to carry out his duties under the contract.

The Agreement repeatedly recites that a sublicensee is an "independent contractor" and specifies that neither Driscoll nor DSA "has assumed under this agreement any rights of supervision and control over the growing of said strawberry crop * * *." The Agreement further provides that the sublicensee

is in no sense the representative, servant or employee of (Driscoll), and * * * Sub-Licensee in growing said crop for the account of (DSA) shall be under the control of (Driscoll), only as to the result of the work assigned to be performed by him and not as to the means by which the results are to be accomplished.

The Agreement specifies a number of grounds for its automatic termination, the most important of which reads:

(h) If at any time, Within the absolute discretion of (Driscoll) it is determined, upon reasonable cause, that Sub-Licensee is, or will be, unable to complete his obligations under this agreement. (Emphasis added.)

B. The Working Relationship of the Parties.

DSA supplies the strawberry plants to Driscoll without any direct charge. 4

Driscoll employees perform all of the tasks necessary to prepare the land for planting, utilizing tractors and other specialized equipment owned by Driscoll. Although the Agreement assigns responsibility for planting the strawberries to Driscoll, sublicensees perform the actual work of planting. The sublicensees space the plants in accordance with marks placed in the strawberry beds by Driscoll employees, following the spacing "recommendations" of DSA. Driscoll pays the sublicensees for planting the strawberries, at a rate he establishes in his discretion ($200.00 per acre in 1976).

Driscoll typically plants several different varieties of strawberries, possessing varying yields. Apparently, Driscoll determines the overall quantity and proportion of each variety to be planted. 5 Driscoll attempts to some extent to accommodate the sublicensees' requests in apportioning the strawberry plants available in each variety. However, on Driscoll's Tschumperlin Ranch in 1976, every sublicensee's plot contained the same proportions of the main types of berries, "summer" and "winter" berries, except for two containing slightly more summer berries.

Sublicensees furnish their own hoes, shovels, clippers for pruning the strawberry plants, and hand carts used in picking the berries. Some of the sublicensees own dusters utilized to dust for mildew. 6 Driscoll selects and supplies all heavier equipment plus irrigation pipe, fertilizers, "dust" for mildew or for insects, and insect-spraying equipment.

For the most part, the sublicensees' own judgment determines the timing of weeding, dusting for mildew, and irrigation. However, Driscoll's foreman, Kazumasa ("Kay") Mukai, if he observes that an appellant's plot is not well maintained, may contact the negligent appellant to "discuss" the situation. 7 According to Mukai, a sublicensee may refuse to respond to such notice, and he has never taken any action against a sublicensee for negligence in caring for his plot. 8

DSA's research department inspects the strawberry plants for insect pests and advises Driscoll of the existence and nature of any insect problem. Driscoll thereafter informs the sublicensees of the need to dust or spray. DSA similarly recommends to Driscoll when fertilizer should be applied, and Driscoll then passes such recommendations on to the sublicensees.

Beginning in about April, as the berries ripen, sublicensees pick the strawberries by hand and pack them in crates purchased jointly by appellants and Driscoll and bearing Driscoll's name. DSA-employed inspectors grade the berries according to standards set by DSA and may require sublicensees to sort and remove inferior berries. 9

DSA markets the strawberries and possesses, under the Agreement, the "absolute right" to process the berries in any manner and to sell them in any market or locality "for such prices and on such terms and conditions as it (DSA) may deem desirable(.)"

Sublicensees are paid weekly, as specified in the Agreement, a set percentage (55% In 1974) of "the net proceeds actually received" for the berries sold that week "by Contractor (Driscoll) from Driscoll Strawberry Associates, Inc., Under Contractor's contract with said patent owner " (emphasis added), less a percentage of certain expenses, such as the cost of baskets or crates. The Agreement does not define "net proceeds," the basis for the appellants-sublicensees' income, except by this reference to Driscoll's separate contract with DSA. Driscoll indicated in a deposition that he receives a "price per crate (of berries)" from DSA but that he does not know how DSA determines that price. 10

The record contains seven identical affidavits of individual appellants, alleging essentially that Driscoll, through his foreman, Mukai, controls the appellants' activities in growing and harvesting the strawberries, especially in operations requiring substantial business judgment. 11

II. Existence of Genuine Issues of Material Fact.

Summary judgment may properly be granted only where no genuine issue of material fact exists or where, viewing the evidence and inferences that may be drawn therefrom in the...

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